(1) Pre-trade transparency increases adverse-selection costs for large traders

Execution cost is a zero-sum game because market-makers are utility maximizing entities. And information is a cost that is factored into this spread. Every extra dollar a market-maker extracts in spread is a dollar the transacting side pays.

This is micro-structure 101.

When a dealer/market maker knows the true size of an order, they widen spreads to offset inventory and information risk. If size revelation were free, TWAP/VWAP algos and hidden-size (“iceberg”) orders wouldn’t exist.

By transmitting full-size, the whale ends up paying both the prevailing-spread and the follow-on impact as the book-reprices.

Hyperliquid publishes size, margin, even liquidation prices in real time. That removes every information advantage the whale has and is offering this up for free to the market makers. So either you:

(a) keep that advantage and trade at the prevailing spread OR
(b) you give it up and pay both the prevailing spread plus the follow-on price impact as the book re-prices.

Perfect transparency doesn’t eliminate spread—it simply transfers the cost of execution entirely onto the party showing size.

In fact you also see this behavior on the HL orderbook. Every time there is a large order at the TOB, you notice the other-side immediately thin out. You can observe this even without an algo. Just stare at the orderbook long enough.

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(2) Transparency feeds other predatory and anticipatory traders further increasing the cost of transacting

There is already a ton of empirical data and research on on “predatory trading,” “order-anticipation,” and MEV all document that when large flow is observable, other fast agents front-run or back-run it, extracting rents from the order-placing originator.

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(3) Public liquidation bands create new attack surfaces and invite “hunting”

Liquidation “hunts” are not hypothetical. Same logic as broadcasting size: information is a cost. If the world knows your liquidation price, you WILL get hunted. Ask @JamesWynnReal.  Jeff knows this; spinning a known risk as a “feature” is pure narrative gymnastics.

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(4) Tradfi market structure tells the opposite story

50% of U.S. equity volume now trades off-exchange or in dark pools precisely so institutions don't advertise size.

Icebergs, conditional blocks, and RFQ platforms like @tradeparadigm and @Tradeweb exist simply because big size and fully lit books don’t mix. Paradigm alone is 35% of Deribit’s daily volume—proof that large clips avoid the CLOB. We wouldn’t have a business if everything went to the lit book.

Retardio

Also note that in Tradfi regulators demand post-trade transparency for fairness, yet allow pre-trade opacity because it delivers better execution.

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TLDR;

a) Transparent books are great for retail price discovery; they’re empirically worse for block execution. This is why @tradeparadex will have both a CLOB and RFQs for large-block execution away from the orderbook.

b) 50-years of market-structure evolution, real-world behavior of institutional desks (dark pools, algos, hidden size) and the academic record on predatory trading, front-running and MEV all contradict Jeff’s arguments.

The more troubling thing is that yet another crypto founder is more than happy to bend facts to fit a self serving narrative.

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@chameleon_jeff

"My exchange is transparent so therefore transparent exchanges are better"

@armaniferrante

"I built a centralized exchange because it is easy so all exchanges are better and more secure"  (lol😂)

Remember kids…..principles +  truth > popularity.